Broken public option promise complicates insurance cancellation issue

The implications of the Affordable Care Act promise that Americans could keep their preexisting health insurance would not be so troubling had another promise been kept.

On September 9, 2009, addressing a joint session of Congress, President Obama pledged, “I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice.”

Yet the promise of a public option to compete with commercial insurance was quickly abandoned. 

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On September 29, 2009 – the single day the Senate Finance Committee allotted to considering a full public option in the ACA – New York Sen. Charles Schumer (D) stated: “If the private insurance market is serving America so well, they have no public option to fear.  If they are serving it poorly, the public option will force them to serve better.”  West Virginia Sen. Jay Rockefeller (D) argued his constituents “need this because they are helpless in front of the insurance companies.”  Yet Democrats favoring a public option dutifully folded their tents in the face of insurance company lobbying. 

All that remained upon the Affordable Care Act’s passage was a public option-lite: $6 billion in loans to start non-profit health insurers in each state called Consumer Operated and Oriented Plans (co-ops).  After only $1.9 billion had been expended, the Administration, without explanation, surrendered remaining funding in the January 2013 “fiscal cliff” deal. 

Odds in favor of co-ops were never great.  After opposing a public option, then ensuring co-op provisions were watered down, Nebraska Senator Ben Nelson voted against the ACA’s final passage.  Upon leaving the Senate he became head of the National Association of Insurance Commissioners.  That makes it ironic that Nelson is leading the charge against President Obama fulfilling his promise to allow Americans to keep their health insurance plans.

Americans losing non-ACA compliant health insurance plans face sticker shock because they lack options.  Consider what the individual mandate means for many of those hoping to use tax subsidies purchasing through exchanges.  In all but three Alabama counties you must buy Blue Cross and Blue Shield of Alabama.  In all but five Mississippi counties you must buy Humana.  In three-fifths of North Carolina you must buy Blue Cross and Blue Shield of North Carolina.  In New Hampshire you must buy Anthem.  In West Virginia you must buy Highmark.  Rural county residents in many other states, including my Washington State, have a single choice.

Monopolism will only be reinforced by federal subsidies, as entering a market, and building a network of doctors and hospital, is a difficult proposition for any insurer.

A New Hampshire resident losing his or her insurance, and resorting to the federally-facilitated exchange, would find a single option omitting 10 of the state’s 26 hospitals.  For these New Hampshirites the insurance cancellation issue is much bigger than “arguing over minutiae” – the dismissive characterization of Florida Congresswoman Debbie Wasserman Schultz, the Democratic national chair.

Now over 4.2 million Americans, many of whom do not qualify for exchange subsidies, have received health insurance cancellations under the ACA.  Look at recent enrollment numbers.  Rockefeller’s West Virginia, with the nation’s second-smallest individual market, has seen 8,800 cancellations against only 198 Highmark enrollees through the federally-facilitated exchange.  Senator Jeanne Shaheen’s (D) New Hampshire saw 269 Anthem enrollments against 22,000 cancellations. 

This situation would have been improved had Obama’s now-forgotten public option promise been kept by Democratic senators like Rockefeller and Shaheen.  Capitulating to the insurance lobby doesn’t look so good now.  But you reap what you sow.

Williams is an Olympia, Washington attorney and a former Washington State deputy insurance commissioner.